R-Infotel, SSTL not to participate in 2G auction

Putting an end to months of speculation that they would be among key bidders, Reliance Infotel, part of Mukesh Ambani-controlled Reliance Industries Ltd, and Russian telecom player Sistema Shyam Teleservices Ltd (SSTL) were conspicuously absent from the list for telcos who on Friday applied to bid in the 2G spectrum auction.

On the other hand, incumbent operators, who had been complaining about the high base price of Rs 14,000 crore for 5 MHz 2G spectrum, joined the party. Bharti Airtel, Vodafone and Idea Cellular (some of whose licences had been cancelled by the Supreme Court order) and Tata Teleservices (for CDMA) on Friday applied for the auctions.

Even as the tough times telecom companies are going through kept many new operators away from the application process, some who had lost their licence due to the Supreme Court order —such as Telenor (through Telewings, a new company floated by it) and Videocon — applied. The latter applied for GSM as well as CDMA technologies.

With GSM spectrum available for five players, including two new ones, and only five players in the fray, analysts say the base price is unlikely to go up substantially. “Though there is no clarity on which circles the applicants are going to bid for, we don’t see more than six-seven bidders for five slots in most places in the GSM play. And, in CDMA, there are only two players,” said a telecom analyst.

Dual technology player Reliance Communications, as well as Aircel, both under financial strain, have decided to stay out of the race.

The last day of filing applications as part of the 2G auction process in the 1,800 MHz and 800 MHz bands ended at 5 pm today. The final list of bidders will be announced on November 6 and the auction for the 1,800 MHz band will start from November 12. Speaking to journalists after the end of the application deadline, DoT Secretary

R Chandrashekhar said: “Six telecom operators have applied and one of them, Videocon, has bid for both GSM and CDMA.”

In a statement explaining its decision of not bidding, SSTL said: “SSTL has consistently maintained that it has been unfairly penalised in the February ruling of the Supreme Court and it has filed a Curative Petition seeking to restore its licences. There is no finding or suggestion by CAG (Comptroller and Auditor General) report that CDMA spectrum was equally or anywhere near in demand as GSM. The company believes it has a strong case and is determined to await its hearing.” The statement also said that spectrum prices made the business plan unviable.

Analysts say Reliance Infotel has backed out of bidding due to some key reasons: One, technology has enabled them to offer voice over the net on the 4G network of reasonable quality and they could easily offer this for free to take on 2G rivals. Two, if the government decides to refarm spectrum in the 900-MHz band, this spectrum, more efficient and valuable than the 1,800-MHz band, would come for auctions next year. The company could bid for that. Three, it could later join hands with or buy out one of the existing players if they won in the bids. “I think their strategy is to push the bidding up and not play a serious role,” says an analyst.